What Is Corporate Law?

A corporation is a legal entity created under state law. The law treats a corporation as an entity separate from its owners, or shareholders, who own stock in the company. Corporations can be small or startup businesses incorporated for tax purposes, or large companies formed through mergers of other businesses.

What makes corporations unique from other business entities is the manner of business formation. Corporations must comply with state regulations and file documents of incorporation so the state recognizes them as corporations. 

Companies often rely on corporate lawyers to navigate these rules, reduce risk, and ensure their business complies with the law. Keep reading to learn about how this area of law impacts your business.

Corporate Law Legal Issues

Corporate law encompasses the legal issues corporations may face. Corporations are subject to many regulations they must follow to enjoy the tax and other benefits of corporations. Most states require corporations to conduct annual shareholder meetings. State law requires meetings of the board of directors and corporate officers. Most corporations have legal counsel at all meetings to ensure compliance with state and federal requirements.

In addition to these corporate law issues, corporations face the same legal issues as other businesses. These can include:

• Employment law issues
• Contract review and disputes
• Product liability
• Intellectual property
• Real estate transfers or leases

Small businesses may retain a business attorney to handle the company’s legal issues. Larger corporations may need a team of lawyers or a business law firm to handle their business needs.

Does My Business Need a Corporate Lawyer?

Corporations can incorporate in states other than their home state. Delaware is a favorite state, offering tax benefits and low incorporation costs. However, corporations must still register in all states where they do business. If your business plan includes outside incorporation, speak with a business law attorney to discuss the advantages and disadvantages.

Various state and federal statutes govern various regulations regarding:

• Issuing stock
• Calling board meetings
• Appointing or firing officers
• Communicating with shareholders

Failure to follow these regulations could expose the corporation, its owners, and its officers to liability and fines. Most corporations hire a corporate lawyer to ensure compliance. If you or your business is facing a corporate law issue, getting legal help from a lawyer is crucial to protecting your startup.

How To Find a Corporate Lawyer

Small business owners should seek legal advice when it’s time to incorporate. Before making that decision, an experienced attorney can review your company’s legal needs and recommend next steps.

Because state law is relevant, your attorney should be licensed in the state where your business operates. FindLaw’s directory of business lawyers can get you started. Enter your city and ZIP code for legal advisors near you. Your search results will also show ratings and contact information.

Corporate Law Terms To Know

The following terms are often used when discussing corporate law:

• Bylaws: Internal rules that govern how a corporation operates and makes decisions
• Corporation: A legal entity formed to conduct business
• Close corporation: A corporation with few owners and private stock
• Public corporation: A corporation with many stockholders and publicly traded stocks
• Registered Agent: The individual or entity designated to receive legal notices and official documents on behalf of the corporation
• S Corporation: A corporation with a limited number of shareholders. S-corps have tax benefits without stock options like other corporations
• Piercing the Corporate Veil: A judicial act of imposing personal liability on the owners, shareholders, or officers of a corporation
• Chief Executive Officer (CEO): The executive with the chief decision-making authority in a corporation. The board of directors appoints or hires the CEO.
• Board of Directors (BOD): A group of individuals elected by the shareholders to manage the corporation’s business dealings

For other business and commercial terms, see FindLaw’s Glossary: Starting a Business.

Related Practice Areas

• Business Organization
• Business and Commercial Law
• Consumer Law
• Taxation Law
• Employment Law — Employer
• Banking and Finance Law